Vladimir Putin orders response to 'unacceptable' Western sanctions on Russia

Russian president Vladimir Putin on Tuesday ordered his government to draft a response to "unacceptable" Western sanctions over Moscow's perceived backing of pro-Kremlin rebels in Ukraine's volatile east.

But, he said, authorities will have to move carefully to make sure the steps do not hurt Russians.

"Political instruments of pressure on the economy are unacceptable. They contradict all norms and rules," news agencies quoted Mr Putin as saying.

"The Russian government has already proposed a number of response measures to so-called sanctions imposed by certain countries.

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"I think that in current conditions, in order to ensure the interests our producers, we could very well think about this now."

Mr Putin added that he expected the cabinet to prepare measures that spared consumers from suffering any shortages of important Western goods.

"Of course, we have to act extremely carefully so that we support domestic producers but do not harm consumers," he said.

The latest and most punishing round of sanctions that the United States and the European imposed last week target Russia's key oil and arms industries.

Top state-held firms have seen their access to Western borrowing markets severely restricted and face a possible freeze on trade of their shares on both European and New York exchanges.

Russia's low-cost airline Dobrolet has also been forced to ground all its flights because of EU sanctions hitting its leases for Boeing aircraft.

Moscow's Vedomosti business daily said the Russian government was now considering whether to strike back at the European Union by placing a total or partial ban on its airlines' flights over Siberia to Asia.

Bank of America Merrill Lynch estimates those fees bring in around $250-$300 million per year for Dobrolet's parent airline Aeroflot - a third of the company's operating profit.

Separately, Poland warned that a renewed buildup of Russian troops on Ukraine's border raises the spectre of a possible invasion.

"Unfortunately, Russia has restored its combat readiness on the Ukraine border with more than a dozen battalion-sized combat groups," Polish Foreign Minister Radoslaw Sikorski, who gave no indication an incursion was imminent, told TVN24 BiS television.

"There's a lot of equipment. This is the sort of thing one does to exert pressure or to invade," he said.